19.12.2019 (Capital.com) - Malaysia expects its palm oil stocks to end the year down at 2.1 million tonnes or remain at the current level of 2.25 million tonnes.

The introduction of the B20 biodiesel programme is expected to increase local consumption of palm oil to 25 per cent from the current 18 per cent.

At the end of December 2018 Malaysia’s inventory recorded an almost two-decade high of 2.3 million tonnes, data from the Malaysian Palm Oil Board (MPOB) showed.

The MPOB said it would be “very happy if the stocks can reduce further to between 1.5 million tonnes to 2.0 million tonnes” especially with the implementation of the B20 programme to kick in next year.

Malaysia, the world’s second-largest producer of palm oil, increased the proportion of palm oil used in biodiesel from 7 to 10 per cent last December in order to increase domestic consumption.

It plans to roll out the 20 per cent biodiesel programme in stages next year. Seventy per cent of oil palm plantation is expected to be certified with the Malaysian Sustainable Palm Oil (MSPO) certification by February.

About 60.6 per cent of total oil palm plantation is MSPO certified so far.

Malaysian palm oil futures ended lower yesterday, weighed by weaker rival oils.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed down 0.7 per cent at 2,859 ringgit ($685.61, £523.32, €615.89). It had fallen as much as 2.5 per cent earlier in the session.